Correlation Between Sligro Food and Brunel International

Can any of the company-specific risk be diversified away by investing in both Sligro Food and Brunel International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sligro Food and Brunel International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sligro Food Group and Brunel International NV, you can compare the effects of market volatilities on Sligro Food and Brunel International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sligro Food with a short position of Brunel International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sligro Food and Brunel International.

Diversification Opportunities for Sligro Food and Brunel International

0.25

Correlation Coefficient

Sligro Food  Brunel International

Modest diversification

The 3 months correlation between Sligro and Brunel is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sligro Food Group and Brunel International NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunel International and Sligro Food is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sligro Food Group are associated (or correlated) with Brunel International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunel International has no effect on the direction of Sligro Food i.e., Sligro Food and Brunel International go up and down completely randomly.

Pair Corralation between Sligro Food and Brunel International

Assuming the 90 days trading horizon Sligro Food Group is expected to under-perform the Brunel International. But the stock apears to be less risky and, when comparing its historical volatility, Sligro Food Group is 1.13 times less risky than Brunel International. The stock trades about -0.19 of its potential returns per unit of risk. The Brunel International NV is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  890.00  in Brunel International NV on September 4, 2024 and sell it today you would lose (5.00) from holding Brunel International NV or give up 0.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sligro Food Group  vs.  Brunel International NV

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Brunel International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brunel International NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Brunel International is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sligro Food and Brunel International

The main advantage of trading using opposite Sligro Food and Brunel International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sligro Food position performs unexpectedly, Brunel International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Brunel International will offset losses from the drop in Brunel International's long position.

The idea behind Sligro Food Group and Brunel International NV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.